1004mc

[djd09]

Due to conflicting market data, lack of verified market data, and latent market factors, the 1004 mc may be misleading. That should cover it.

 

[Michigander]

Thank you for finally giving me a direct answer.


I'm not sure what to make of your use of the term "sounding board." If that means I'm trying to clarify what Fannie Mae means in their selling guide and announcements I guess that may be the case. I suspect, however, that you are using the term derisively, as evidenced by our comments that I don’t “go against FNMA” and that I’m “one of them.”


I don’t “go against” Fannie Mae because it accomplishes nothing and panders to the crybaby mentality that I so despise. I’ve been pretty much out of the loop for the last 5 years or so, but always had better luck working constructively with the folks at Fannie Mae than bellyaching about them. I could approach them with suggestions as to areas where appraisers were having problems understanding the selling guide and changes to the guide would often follow. I look at that as trying to help appraisers.


I don’t know what you mean by “them” but I do know who and what I am. I’m a semi-retired, 67 year-old appraiser, educator and consultant. From about 1995 to 2010 I was blessed to have made my living developing and teaching CE courses for appraisers. During that time, I picked up a lot of information that I enjoy sharing, as others have told me many times that they have found the information useful. However, at times like this I have to wonder if it’s worth the bother because of folks who want to waste my time with false accusations and innuendo.


Let me be very clear. I have no axe to grind or agenda to promote and take great umbrage regarding your efforts to paint me as something I am not. I have asked you in the past to leave me be. Here is a request that I made to you on this forum over two years ago:


“Please do not bring up my name on this forum. Please do not address issues to me. I do not wish to discuss this issue or any other with you. Please leave me alone. Good day.”


You are probably a decent fellow and I’m sure your wife and kids love you. Understand this is not personal but appreciate that I do not take kindly to your comments here. So, let me make this request to you one more time with the hope that this time you will honor it.

Please do not address issues to me as I have no desire to engage in any discussion with you. Please leave an old man alone. God bless and have a good day.

I know Rich personally and he's a good guy. I like him and think what he just wrote is how I know him as well

 

[hastalavista]

Due to conflicting market data, lack of verified market data, and latent market factors, the 1004 mc may be misleading. That should cover it.

I still don't understand, but you are raising an issue that many others raise... so it isn't just you by a long shot.
How can a form be misleading when I'm the one who is ultimately responsible for (a) interpreting all the data necessary to make a conclusion which almost always (in my case) includes supplemental information to what is in the 1004MC and (b) presenting that data, explaining how I interpret, and then stating what my conclusion is?

Bottom line: It isn't the form that is making the conclusion... it is me. How can the form be misleading when I'm the one who is presenting the analysis and making a conclusion (clearly presented, summarized, and stated in the report)?

What am I missing?

 

[Joe Flacco]

Well the data populated in the form can be misleading. Misleading or suggest a trend that is not what is actually going on in the market. Which is why I believe that we must do additional analysis. Can't just look at the data in the MC form and start checking boxes.

 

[djd09]

If you read my blanket statement , i do not call the form misleading but the data conflicting, unverified, and possible latent factors as why the results may be misleading.

Do they have an unstable box i can check?

 

[J Grant]

Well the data populated in the form can be misleading. Misleading or suggest a trend that is not what is actually going on in the market. Which is why I believe that we must do additional analysis. Can't just look at the data in the MC form and start checking boxes.

Data in and of itself can't be misleading. It is what it is. If only two sales found that are comps for subject within the appraiser defined market area in the past year , then how is that misleading? It is what it is.

That does not mean only 2 sales occurred in the entire market, or in the neighborhood. Only an idiot would assume that. Still, for the sake of the reader, explain it Such as "Though 40 sales occurred in the subject neighborhood in the last year, most were smaller, older homes. Only two new home sales over 3000 sf that are comps found in the past year in the market area."

If the reality is that only 2 comp sales were found in the last year, then explain it, what it means in contrast to other activity, and it wont' be misleading)

From the fact that only 2 sales of similar properties found in past year, conclusions can be drawn. One is the appraiser may realize they were too limited in area and needs to expand the neighborhood search out. Another option is the subject is an oddball property type, thus only 2 sales (which can indicate marketability/atypical property issues which need to be analyzed and addressed). Or 2 sales because the properties are in such short supply, yet in demand that few people sell them. In which case maybe go back a year or more for older sales and so on.

Data in and of itself is not misleading, but lack of explanation about it, or failure to do additional searches and compare results or poorly representing the data context in market can be misleading from the appraiser.

 

[Joe Flacco]

I am not saying that the form is misleading to the client or intended user. I am saying that the data populated in the form can mislead the appraiser to form bad opinions. Two totally different things.

 

[hastalavista]

If you read my blanket statement , i do not call the form misleading but the data conflicting, unverified, and possible latent factors as why the results may be misleading.

I hear you, but I'm loathe to call any analysis I put in my report as possibly being misleading since I'm responsible for ensuring that nothing in my report is misleading. And, as I said, I can clear-up whatever items I think might lead one to misinterpret the data by addressing that in the report.

Do they have an unstable box i can check?

No, but you don't need a box to make that conclusion. I've concluded that the market is "volatile" and trend direction is "uncertain" at this time.

I'm not trying to convince you that the form is great. What I am trying to argue is that form will convey exactly what I want it to convey because I'm the one who is summarizing the results and making the conclusion.
That's why I don't have an issue with the form even if I find that many times it isn't useful or reliable. By the time I'm done analyzing the market, whatever data I present and conclusions I draw are useful and reliable.

All the form is, is a snapshot of data that is designed to present a picture (the market conditions) a certain way.
If the form's snapshot doesn't present a reliable picture of the market, I simply expand on the view, incorporate the small view into my larger picture, summarize the analysis, and make the conclusion.

When you take a photo of something from a specific angle, and that angle captures what you think needs to be captured, you snap the photo.
If that angle doesn't capture what you think needs to be captured, you'll expand the view or provide other angle shots so what you think needs to be captured is captured.
The same analogy applies to the form. When you are done, form or no form, what you think needs to be captured will be captured.

 

[djd09]

Does fannie have definitions of increasing or decreasing? Does one consider a change in the median sales price of .01% or 1% or 10% the line of increasing or decreasing. What if on a 5 year trend is decreasing and the one year trend is increasing wouldn't the results on the 1004mc be misleading?

 

[J Grant]

I am not saying that the form is misleading to the client or intended user. I am saying that the data populated in the form can mislead the appraiser to form bad opinions. Two totally different things.

If the appraisers comes up with "bad" opinions, it is not the data's fault nor the form's fault.. It is the appraiser's fault.

Not to nitpick, but to clarify...Data is populated into the form . From that data, it is up to the appraiser to apply whatever analysis is needed (SOW) including additional research. Whatever appraiser wants to rely on, such as past appraisals, interviews, other searches ...to support a "good" opinion An opinion from the data that is supportable and credible and makes sense per activity).

Lack of data (few sales or listings) or uneven , wide range of prices are more difficult to analyze, but if they reflect that segment of the market, there is nothing to stop appraiser from doing additional research . If all data, all the time was plentiful, conforming, and neat we would not be needed. The fact that the RE market is "messy" is why human analysis is needed ( assuming competent analysis)